Threat or a Gift? What RPA Really Means for Outsourcing

September 26, 2018

Anna Frazzetto’s article from Forbes.com on September 26, 2018.

Are the rumors of the death of business process outsourcing (BPO) greatly exaggerated? Or is there something to them? The rapid rise of robotic process automation (RPA) adoption and its impact on jobs and industries are the likely culprits behind a growing fear that the days of BPOs are numbered. In fact, with technology disruptions a constant and the Asia Pacific region emerging as the fastest growing market for robotic process automation, it is natural to wonder if robots will be taking over the work so many companies worldwide have outsourced to BPO firms in the Asia Pacific (Asia-Pac).

Are bots — robotic software programmed to complete human tasks — poised to take over APAC and the world’s outsourcing industry entirely? As chief digital technology officer and president of technology solutions of a company that works in the BPO space, this is a question my team and I have delved into. While “take over” is great language for science fiction action movies, this evolution will look more like many of the technology evolutions that have come before it. Change is coming, as is always true with technology, and RPA offers excitement, disruption and impressive opportunities for the outsourcing industry.

RPA Excitement

Around the world and across Asia-Pac, business and tech leaders are abuzz with RPA and artificial intelligence (AI) ambitions. The 2018 Harvey Nash/KPMG CIO survey found that one-third of Asia-Pac CIOs (33%) are currently investing in RPA (minimally, moderately or significantly) and 31% of CIOs worldwide said this same. Meanwhile, 7 in 10 IT leaders said they are featuring AI technologies as part of their investment plans. The speed behind the adoption of RPA is also notable and is expected to be worth $5 billion by 2024.

A good deal of those fast-moving RPA and AI implementations are possible because of the skill, size and scope of the Asia-Pac workforce. In 2017, UBS analyst Sundeep Gantori revealed on CNBC his organization’s analysis that by 2025, China and India’s combined AI talent pool will exceed the U.S.’s pool. The sheer size of the tech talent pools across Asia-Pac, combined with historically low IT unemployment in places like the U.S., is making the Eastern hemisphere a hotbed of RPA and AI activity and excitement. And where there is sweeping excitement and activity, there is also the question of disruption. How big and how painful might the change be?

The automotive industry offers a case study in how automation and the use of RPA can change an industry, a workforce and local economies. Robots have been a part of the automotive manufacturing process since the 1960sand have gradually taken on more and more of the tasks involved in building cars. Today, robots are pervasive across the manufacturing line, painting, welding and assembling the world’s automotive transportation. In a study on how local labor markets are affected by RPA, economists Daron Acemoglu and Pascual Restrepo found that by implementing one robot per 1,000 workers, the automotive indusrty reduced the employment-to-population ratio by 0.18 % to 0.34% and reduced wages by between 0.25% and 0.5%. The more robots on the job in the automotive and other areas of manufacturing, the fewer people on the job and the less they make.

Will the same workforce disruption be true for BPO providers? We are already seeing some disruption happen in situations in which customer service chatbots have taken over some of the simple phone and chat support that people once provided. Marks and Spencer, the U.K.-based department store, recently announced it will replace its customer support switchboard teams with AI technology. However, those customer support employees are not losing their jobs. They are being moved to in-store roles to handle in-person customer engagement work. This reassignment of higher-value work — direct consumer engagement or higher-level technical work — is more likely the kind of disruption we expect to see as RPA continues to take hold. Advancements like RPA will do what technology has always done, eliminate the simpler, repetitive tasks allowing businesses and their employees to compete in different, more innovative ways. The challenge and opportunity for BPO firms will be to identify the right opportunities as RPA frees up resources.

RPA Opportunity

Rather than a threat to BPO, many inside the industry see RPA as an opportunity. First, it’s technology that can improve how outsourcing firms operate themselves, optimizing simple repetitive tasks and freeing employees to focus on more complex, higher-value customer challenges. Business leaders want to outsource to firms that are innovative.

The changing roles of BPO employees can also be an opportunity. Many businesses and business leaders still don’t have a firm grasp of exactly how RPA — and AI on the whole — can improve their operations and offerings. They are already looking for third-party providers to deliver RPA and AI to support and transform their digital solutions. This is a chance for the BPO industry to convert a disruption into an opportunity. The aforementioned tech skill shortage means there is a lack of RPA and AI expertise in many IT departments. BPO firms that can adapt their outsourcing capabilities to include RPA and AI expertise will continue as essential partners to businesses looking to thrive in the digital marketplace.

Change Starts From Within

Those inside the BPO industry have often marketed their outsourcing prowess as an advantage for businesses looking to reduce simple transactional work and focus on higher value relational, strategic and innovative work. Now the BPO industry must do the same, looking at RPA and AI as ways to become more relationship-focused, strategic and innovative digital partners to their customers. The change that customers expect from their BPO providers is also now the kind of change the BPO industry must embrace for itself.